Tuesday, July 17, 2012

(Reuters) - Corn and soybeans in the U.S. Midwest baked in an unrelenting heat wave on Monday with fears rising of big crop losses that will boost food and fuel prices and cut exports and aid from the world's top shipper of the key crops. The condition of the nation's corn and soybeans as of Sunday deteriorated even more than grain traders had feared, and the U.S. Agriculture Department cuts its weekly corn crop condition rating by the biggest amount in nearly a decade.

After weeks of growing drought some lucky farms have been doused by scattered thunderstorms in the past few days. But weather forecasters warned the heat and dryness would only intensify through the end of July and possibly beyond."We're moving from a crisis to a horror story," said Purdue University agronomist Tony Vyn. "I see an increasing number of fields that will produce zero grain."

The drought scorching the U.S. Midwest is the worst since 1956, the National Oceanic and Atmospheric Administration said in a report posted on its website on Monday. Drought is affecting 55 percent of the land mass in the lower 48 states.

The corn crop is in the greatest danger. Plants are trying to pollinate to let ears fill with kernels, a period when adequate moisture is vital for final yields. The United States ships more than half of all world exports of corn, which is made into dozens of products, from starch and ethanol to livestock feed. The USDA on Monday rated the corn crop - which had once been estimated to total a record 14 billion bushels this year - at only 31 percent good-to-excellent, down 9 percentage points on last week.

The soybean crop rating was cut to 34 percent good-to-excellent, down 6 percentage points from the previous week. Chicago Board of Trade corn for December delivery has soared 54 percent since mid-June, reaching a contract high of $7.78 on Monday and approaching its record price near $8.